McDonald's turnaround wizard dies

CEO: James R. Cantalupo, the man who revitalized the fast-food chain, is dead at 60, and Charlie Bell, 43, succeeds him.

April 20, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

James R. Cantalupo turned around McDonald's Corp. faster than he thought he could.

Now, the world's largest fast-food company will have to continue without him much faster than it expected.

Cantalupo, who was lured from retirement 16 months ago to become chairman and chief executive and revive one of the world's best-known brands, died early yesterday from a heart attack while attending a worldwide meeting of company franchisees in Orlando, Fla.

His death, at age 60, stunned the company that sells food in 119 countries. His passing also seemed to make investors jittery, sending McDonald's stock down 71 cents, or 2.6 percent, to close at $26.75 yesterday on the New York Stock Exchange. The stock had risen 54 percent since Cantalupo took over from Jack Greenberg, who was forced out as the company's sales languished.

But analysts predicted that the losses would be brief and that the company would continue on course. The company, based in Oak Brook, Ill., lost no time in naming Charlie Bell, 43, and McDonald's second-in-charge, to replace Cantalupo.

Bell, previously the company's president and chief operating officer, was being groomed before Cantalupo's death to eventually take over the running of the company.

"Charlie Bell has worked side by side with Jim during these past 16 months to revitalize McDonald's all over the world," McDonald's board of directors said in a statement yesterday. "He is ideally suited and prepared to continue Jim's remarkable focus and discipline on our business."

Cantalupo died at a hospital shortly after suffering the heart attack at his hotel about 4 a.m. He had been scheduled to deliver the opening remarks at the convention, which was postponed.

"Jim was a brilliant man who brought tremendous leadership, energy and passion to his job," Andrew J. McKenna, McDonald's presiding director, said in a statement. "He made an indelible mark on McDonald's system." McKenna, 74, was named chairman of the board yesterday.

A longtime McDonald's executive, Cantalupo retired in 2001 after 28 years, only to be brought back last year to rescue the company from declining earnings and customer dissatisfaction.

McDonald's had virtually invented the fast-food genre since Ray Kroc bought a California hamburger stand from the McDonald brothers in 1954. The company's innovations in marketing and fast food, such as Ronald McDonald, the "golden arches" and the Big Mac, became cultural icons and representative for better or worse of America around the globe.

But in recent years, the company had been criticized for lapses in quality and service. As a new generation of restaurant competitors focused on healthier choices, the company became a target for increased concern in the United States about obesity. In the last three months of 2002, McDonald's posted its first quarterly loss since going public in 1965.

Cantalupo halted what he saw as an overly aggressive expansion plan by McDonald's, closed hundreds of stores, launched a new marketing campaign and revamped its menu. McDonald's has 30,000 restaurants and 400,000 employees.

New food items included a line of healthier options including low-fat salad dressings and white-meat Chicken McNuggets. Last week, the company announced a new "Happy Meal" -- long a child's staple -- aimed at adults that will include salad, bottled water and pedometers to encourage walking. The company also said it would soon introduce fresh fruit in place of french fries for kids and will gradually phase out "super-sized" meals.

An advertising campaign introduced last fall, with the slogan "I'm lovin' it," featured a jingle by pop star Justin Timberlake and images of young people dancing and laughing. The campaign appeared to infuse the company with a hipper image, crucial to recapturing a younger audience.

Cantalupo combined the food and marketing advances with a renewed focus on such basics as restaurant cleanliness, speedy service and employee friendliness.

The results were an almost unprecedented surge in sales. In February, McDonald's announced a 20 percent increase in revenue compared with February 2003, the biggest year-over-year increase since the 1970s. Sales increased 17.5 percent during the first quarter of this year.

Analysts said they expect a smooth transition with the appointment of Bell, who worked closely with Cantalupo to implement the turnaround.

"This was a big ship to turn around and Cantalupo used a team to do that successfully," said Matt DiFrisco, an analyst with Harris Nesbitt Gerard in New York. "That team is still in place."

Cantalupo's tenure

January 2003: James R. Cantalupo emerges from a brief retirement to take over as McDonald's chairman and CEO.

April 2003: McDonald's said it would consider offering yogurt and apple slices and other fruits in its Happy Meals for Kids. The company also announces that it will test an all white meat chicken nugget.

September 2003: McDopnald's launches a hip new advertising campaign centered on the slogan "I'm lovin' it." The campaign features a jingle by pop star Justin Timberlake and commercials with young people laughing and dancing..

March 2004: McDonald's announces it is phasing out its "super size" fries and drinks in an effort to streamline its menu and offer healthier options.

April 2004: The fast-food company said it is rolling out Adult Happy Meals, which include salad, bottled water and a pedometer. Available in stores May 6, the meal will also have a brochure with exercise tips.

April 19, 2004: Cantalupo dies of an apparent heart attack in Orlando, Fla., at age 60.